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Natural expectations and home equity extraction
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Pancrazi, Roberto and Pietrunti, Mario (2019) Natural expectations and home equity extraction. Journal of Housing Economics, 46 . 101633. doi:10.1016/j.jhe.2019.05.002 ISSN 10511377.
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Official URL: http://dx.doi.org/10.1016/j.jhe.2019.05.002
Abstract
In this paper we propose a novel explanation for the increase in households’ leverage during the U.S. housing boom in the early 2000s. Specifically, we apply the theory of natural expectations, proposed by Fuster et al. (2010), to show that biased expectations on the two sides of the credit market have been a key determinant of the surge in households’ leverage but also that inaccurate long-run expectations on behalf of financial intermediaries are a necessary - yet so far overlooked - ingredient for matching the observed debt dynamics.
Item Type: | Journal Article | ||||||||
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Subjects: | H Social Sciences > HG Finance | ||||||||
Divisions: | Faculty of Social Sciences > Economics | ||||||||
Library of Congress Subject Headings (LCSH): | Home equity loans, Housing -- Prices, Global Financial Crisis, 2008-2009 | ||||||||
Journal or Publication Title: | Journal of Housing Economics | ||||||||
Publisher: | Elsevier | ||||||||
ISSN: | 10511377 | ||||||||
Official Date: | December 2019 | ||||||||
Dates: |
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Volume: | 46 | ||||||||
Article Number: | 101633 | ||||||||
DOI: | 10.1016/j.jhe.2019.05.002 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 16 May 2019 | ||||||||
Date of first compliant Open Access: | 6 November 2020 | ||||||||
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